NASA sells technology rights to highest bidder

History was made in Chicago this past October at a public auction that saw the first-ever sale of rights to government-owned patents. A bidder picked up an exclusive license to a group of NASA patents for signal-processing technology at the event, which was organized by intellectual property managing firm Ocean Tomo LLC. Darryl Mitchell, a technology transfer manager at NASA’s Goddard Space Flight Center, which filed the patents, says technical applications under that license range from voice recognition to financial market modeling.

Known as the Hilbert–Huang transform, the technology covered by the license is a set of algorithms to convert nonlinear, nonstationary signals, such as from ocean or acoustic waves, into frequency data. The patents netted $55 000 plus an undisclosed percentage in ongoing commercialization royalties for Goddard and inventor Norden Huang, a former NASA oceanographer. Goddard’s revenue from the sale will go back into R&D and technology transfer programs, says the center’s innovative partnerships program office chief Nona Cheeks.

Circumventing hurdles

It took about a year for Goddard and Ocean Tomo to navigate regulations and get the go-ahead for the auction. “‘We can’t do that’ was the gut reaction for many people across the agency,” says Mitchell. “Our main goal was to demonstrate that this could work.” The auction was also the first time Ocean Tomo had sold licenses rather than patents.

The biggest hurdle to NASA’s participation in the auction, says Mitchell, was a federal requirement that any exclusive licensing be subject to public comment, which could nullify the transaction. “[That] doesn’t work so well in an auction,” he notes. NASA’s legal team addressed the requirement by licensing the patents before the auction to an Ocean Tomo subsidiary that then transferred the license to the winning bidder. Potential bidders also had to satisfy federal law by prequalifying as US domestic companies and showing a commercialization plan for the technology.

Whether auctions catch on with companies interested in mining patented government technology remains to be seen. Already, though, Mitchell says the NASA–Ocean Tomo partnership has prompted calls from other federal laboratories as Ocean Tomo prepares for its next auction this March in San Francisco. “We were encouraged by what we saw,” says auction attendee Gary Jones, the Washington, DC, representative for the Federal Laboratory Consortium for Technology Transfer. The consortium, he says, will look into public auctions as a potential tool for its members, which include NIST and several Department of Energy laboratories.

Also taking notice are universities, where research, according to the latest NSF statistics, is about 64% federally funded and is subject to rules comparable to those at federal labs. “NASA is setting somewhat of a precedent for the rest of us,” says Patrick Jones, director of the University of Arizona office of technology transfer and immediate past president of the Association of University Technology Managers. “But I don’t think you’ll see a stampede of universities entering auctions.” Auctions, he continues, “lack the essence of knowledge transfer, [which includes] the transfer of graduate students to industry.”

Casting a wider net

NASA and other federal agencies have traditionally advertised their intellectual property in technical briefs and other trade publications or have negotiated with individual prospective buyers. What the auction does, says Connie Chang, director of Ocean Tomo’s federal branch, is “cast a wider net” and “take away the burden of a one-to-one negotiation, which takes a really long time.” Chang adds that the auction atmosphere generates a “true market-based price” and lowers transaction costs. Says Ajit Vaidya, a patent attorney in Washington, DC, “Auctions may prove to be a very good technology transfer mechanism for institutions, like federal labs and universities, which have a broad suite of patented technologies, where it is unclear who may be interested in commercializing the technology, or where there are a very large number of potential partners.”

Meanwhile, NASA continues to receive post-auction attention: The agency and Ocean Tomo have been contacted about unsold patents related to a GPS system for spacecraft and a capacitance-based sensing technology.